Executive Compensation

“

Bosie: Master, I marvel how the fishes live in the sea.
Oscar: Why, as men do a-land; the great ones eat up the little ones: I can compare our CEOs to nothing so fitly as to a whale; a' plays and tumbles, driving the poor fry before him, and at last devours them all at a mouthful: such whales have I heard on o' the land, who never leave gaping till they've swallowed the whole compensation, options, expenses, consultancy fees, and all.

”

~ Oscar Wilde on CEOs

Pay

Compensation

Ordinary people like you and me receive "pay", if we're lucky enough to have a job. Chief Executive Officers of large companies, and to a lesser extent their yes-men, hired thugs, spittle-lickers etc. receive "compensation." The differences are:

• Compensation is much bigger than pay. Typically it is between 50 and 1,000 times as much. (the average factor is about x400; up from x20 in 1970)
• Compensation does not require knowledge. A breakfast cereal maker can become CEO of a computer company without anyone batting an eyelid.
• Compensation does not require performance. If a company is doing well, the CEO gets lots of money to reward him; if it is doing badly, he gets lots of money to motivate him to do better.
• Compensation does not even require continued employment. If a CEO (a) screws up so comprehensively he has to be fired, or (b) is so successful the company is devoured by a bigger company, he gets several years' compensation in one lump.

Why is this? -- there are four theories, at least.

Jesus Christ's Theory

As the Bible says, "For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath". This quote is hung in most executive washrooms just above the sink.

What Goes Around, Comes Around

Executive Compensation is decided by "Compensation" committees. These are made up of CEOs of other companies who are his fellow-golfers/shriners/members of sinister secret societies. It's not their own money, and he will return the favour next time.

The Lake Wobegon Effect

Just as in Lake Wobegon School, where all the children are above average, our company is above the industry average. Therefore our CEO should get above the average compensation. Every company in the industry does this, so the average keeps going up until average means about as much as John Travolta in a balloon with a fat lady.

Rich people are better people

“

And a man grows boring for women,
And a man grows dull with ale,
Well if he can find his soul at last

Money, that does not fail”

~ Oscar Wilde on Ambition

Why does a CEO want so much? Why $20,000,000.00 rather than $10,000,000.00? There is certainly nothing anyone needs, and probably nothing anyone wants, for which the extra amount would be required. But this is to miss the point. CEOs differ from you and me, not only in having no sense of shame, but also in believing, with every fibre of their being, that a rich person is a better person, in the sight of God and all right-thinking men, than a poor person.

And a really rich person, such as a CEO, is so much better as to be a different species of hominid, as superior to Joe Schmo as Joe Schmo is superior to a cockroach.

See also

• Capitalism